The transition from socialism to market capitalism by the shock therapy approach suggests that
A) the transition proceed immediately and impact all economic variables at once.
B) government always centrally plan the economy.
C) the transition be gradual with sequential changes in government controls, etc.
D) government always control wages, prices, and interest rates.

Question

Quizplus · Accepted Answer

The shock therapy approach suggests that the transition from socialism to market capitalism should proceed immediately and impact all economic variables at once. This approach involves rapidly liberalizing the economy by removing price controls, privatizing state-owned enterprises, and opening up markets to competition. The goal is to create a rapid and decisive shift towards market economics, with the hope that this will jumpstart economic growth and development.

The Transition from Socialism to Market Capitalism by the Shock